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Review of
UK LAND INVESTMENTS GROUP

Page One of Three


1. Review

Review from Business Opportunity Watch Rating Reviews,
October 2007 Issue 8

2. Editorial Postscript of 13th September 20083.
Events after October 2007







1. REVIEW
Extract from Business Opportunity Watch Reviews
October 2007 Issue 8

UK LAND INVESTMENTS GROUP
UKLI Limited
Berkeley Square House
Berkeley Square
London
W1J 6BD
Tel: 020 7969 1880
www.ukland.co

Rating Review:

UK Land Investments Group describes its activities as follows: "We've developed a simple way for you to be able to buy prime undeveloped land - which we believe has the potential to gain planning permission.

We've taken away all of the complexity, by identifying prime pieces of undeveloped land, dividing it into building sized plots and then offering these plots to individuals."

In its sales material, the company stresses the importance to its customers of its highly experienced and well-qualified Strategic Land Buying Team whose head is Brian Smith BA (Hons) MRTPI (Strategic Land Director), and which also includes Derek Lawrence BTP MRTPI MRICS (Planning Director) and James Bromhead BSc (Hons) MRICS (Senior Surveyor).

However, despite the strength of this team, and despite the company's massive plot sales (according to the company accounts for the 18 months ended 31 August 2006 the gross profit amounted to £13.7 million) it appears that no plot sold by this company has ever achieved planning permission ... or, at least, this question simply remained unanswered in my following correspondence with the company a few months ago:

My Letter to UKLI
22nd July 2007


Dear Sirs

I produce an online magazine called Business Opportunity Watch Monthly which analyses and assesses all manner of "earnings opportunities" which are advertised to the public, such as business opportunities, non-FSA-regulated investment opportunities, and opportunities for betting on the financial markets, on the horses etc.

A reader asked me about UKLI and in the course of my research I came across the letter dated 7th November 2006 from Greg Mulholland MP addressed to Nigel Walter as the Managing Director of your company, and I also saw Nigel Walter's posting on the forum at www.propertyscam.org dated 30th November 2006 in which he starts off, "Dear readers, I am the Managing Director of UK Land Investments ..."

However, I have checked records at Companies House for UKLI Limited (company number 04656772) and Nigel Walter is not shown as a director: the three current directors are shown as Lukbir Bains, Sudhir Singh Kundi and Shaikh Kiayani Sameera.

Please explain.

I had thought that the explanation might be that Nigel Walter is the Managing Director of a holding company, but this is not the case because all the shares in UKLI Limited are held by an individual - Baljinder "Bally" Chohan.

In the course of my research I noted that there appears to be a mistake in the notice you carry at the foot of your web pages which says, "UK Land Investments is a trading name for UKLI Limited" and goes on to explain that your company is not regulated by the Financial Services Authority and that it only "offers parcels of land for sale to individuals.  UKLI Limited does not have any role in pursuing planning permission, or managing the land once it has been sold and as such, this is not to be viewed as a collective investment scheme". 

Surely, the trading name of your company is UK Land Investments Group, not UK Land Investments?

I am delighted to hear that Nigel Walter is "concerned with companies who are mis-selling or mis-leading with their marketing information" and I have a simple suggestion to put to you.

In making this suggestion, I wish to clarify that there is no implication that your company's marketing material is mis-selling or misleading: it is simply my suggestion for consumers to have the benefit of independent advice.

All the cases I have come across where members of the public have been unhappy with their purchases of land plots (or their purchases of buy-to-let apartments or their purchases of any other unregulated investments such as wine or art) would be unlikely to have happened if consumers had been advised at the outset to obtain their own independent valuation advice and their own independent legal advice.

It seems to me that almost all the problems with unregulated investments flow quite simply from the fact that the marketing material for these investments makes consumers think that they can rely on the vendors' valuations and on the legal advice which comes either from the vendor or from solicitors recommended by the vendor.

Whilst it is obviously the case that professional people such as lawyers and valuers are required by the rules of their professional bodies to put aside any conflicts of interest in carrying out their duties, in my view a prospective purchaser puts himself in an inadvisable position if he uses, for example, a firm of lawyers recommended by the vendor. 

For example, it could be the case that this firm of lawyers receives a lot of work from the vendor, or by virtue of being recommended by them anticipates receiving a lot of work in the future, and so there is a conflict of interest which the purchaser has to rely on being rigorously put aside by the solicitor in giving his advice.

I think that all your company needs to do to instantly remove any doubts about "mis-selling or mis-leading" is to make it clear on both the Frequently Asked Questions and the Investment Process pages of your website that prospective purchasers are advised to seek their own independent valuation advice and their own independent legal advice.

I note that your Frequently Asked Questions page does not raise the question of whether independent valuation advice would be advisable: and in response to the question "Do I need a solicitor to purchase land?" your answer is "No".

Your answer to this question continues as follows: "You are of course welcome to use one if that gives you peace of mind, however 85% of our clients use our free legal service, since we prepare the contracts and get all the land searches and details when we purchase a site.

It is important that if you elect to use a solicitor you find one who is familiar with dealing with land transactions - in our legal pack we include a list of independent solicitors who we have found have the necessary experience in such transactions to facilitate your transaction, although you are of course free to select anyone you wish.

If there is anything in our agreement which is not clear, you are welcome to call our in-house legal team who are happy to answer any questions you may have - if you are still not sure on any points then we would recommend that you do consult an independent solicitor who has experience in dealing with land transactions
."

As I have stated above, I regard it as inadvisable for a purchaser to rely on your own company's legal advice or on the advice of firms of solicitors recommended by yourselves.  I am also astonished by your implication that it is not easy to "find one who is familiar with dealing with land transactions".  Did you check this with the Law Society?  I thought that just about all general firms of solicitors dealt with land transactions as their bread-and-butter business.

I also have a general question about the purchase of land plots which I would be most grateful if you could answer. 

As you state, your company has nothing to do with obtaining planning permission, so this will be down to the purchasers.  In practice, how would this work if just one purchaser of a plot was prepared to pay planning advisors to seek permission to develop his plot?  Would he be likely to get planning permission if he was seeking it for just one small part of a big field, for example?  If not, then would all the plot owners need to be acting in concert to seek planning permission? 

If they do all need to act together, then how would this one plot owner get in touch with all the others, particularly if this happened years ahead when the company which had sold the plots was no longer in existence?

And what would happen if some of the plot owners did not want to develop their plots, or did not want to pay their share of the fees or - if this happened many years from now - were simply untraceable?

Finally, so far as you know, have any of the land plots your company has sold received planning permission?

I have copied this email to Greg Mulholland MP, and I look forward to your reply, which I will likewise copy him in on.

By copy of this email to Greg Mulholland, I also wish to put to him my suggestion as to how the government could easily resolve the concerns they have about the marketing of non-FSA-regulated investments. 

My suggestion is to introduce a legal requirement for the marketing material for anything which describes itself as an investment and which is not FSA-regulated to carry a Statutory Notice on its marketing material at the places where the marketing material refers to investment potential and on the application form (similar to the one which is required by the Trading Schemes Regulations for the marketing of multi-level schemes) to say something along the following lines:

STATUTORY NOTICE
This investment is not regulated by the Financial Services Authority.  As such, the government's advice is that purchasers should protect their own interests by appointing their own independent valuer and their own independent legal advisor.

Yours faithfully
Marian Owen

UK Land Investments Group
Reply dated 2nd August 2007
From Robin Barton

Thank you for your letter dated 22nd July 2007.

We respond as follows:
  1. UKLI is part of a group of associated companies and Nigel Walter was Managing Director of a board heading up this group of associated companies.
  2. UKLI Limited is more commonly known in the trade as UK Land Investments but the name UK Land Investments Group is indeed sometimes used.
  3. We are committed to ensuring that our marketing material is neither mis-selling or misleading and would welcome any suggestions you might have to ensure this remains the case.  All of our clients are actively advised to obtain independent legal advice and a form is required to be filled out whereby they have to decide if they wish to appoint an independent legal advisor and requesting the appropriate contact information.  Due to the nature of the transaction, we advise solicitors who have been used by clients in the past and therefore have the experience of our documentation, and thereby saving the client time and money.  We have dealt with a number of different solicitors and it is our experience that many do not understand this type of transaction.  We have no association with any of the solicitors we recommend, normally they approach us to be placed on the panel, and clients are free to use any solicitor they wish, there is no pressure at all to use any suggested solicitors.  We refute the assertion that our recommended solicitors would give less rigorous advice to a client and the solicitors in question would also we are sure sternly resist any such accusation.
  4. Our in-house legal team do not provide legal advice to clients, they merely assist with the documentation.  If advice is required on the specifics of the documentation which is outside of this realm, a client is immediately advised to seek their own independent legal advice.
  5. With regard to the suggestion that an independent valuation be carried out, we believe this would be overly costly for a client due to its complicated nature, however, we would be more than happy to discuss this in more detail with you.
  6. With regard to your questions concerning the model, we would suggest meeting up to discuss this in person due to the large number of questions you have raised.  A member of our Strategic Land department would be happy to take you through the detail of the UK planning process.
  7. On your last point concerning the disclaimer, we have been attempting to work with the authorities to protect consumers from rogue operators and have welcomed regulation to the industry and would be pleased to discuss this with you further.
We have been working closely with our PR agency to ensure that any reporting concerning UK Land Investments is accurate and that we are given a chance to give our side of the story.  The most effective method we have found is for the journalist to come to our office in London and to discuss any questions they have face to face with members of the team.  If you wish to take up this opportunity please let us know when you are available and we will make the necessary arrangements.  We look forward to hearing from you.

Kind regards
Yours sincerely
UKLI Limited

My reply to UKLI
3rd August 2007

Dear Mr. Barton

Thank you for your invitation to come to your London office to discuss the mechanics of your company's land investment offer.

However, I prefer to have written information from companies, because that way there is less likelihood of misunderstanding.

My method of operation is that I focus on the information which is provided to consumers at the time they make their purchasing decision.  Normally, this information is provided in a sales letter and/or in a brochure or - in the case of an offer marketed over the internet - on a web site. 

In my view, everything consumers need to know should be provided to them as part of the offer, so that they can make an informed purchasing decision.

In the case of an investment decision, I would have thought that this information needed to include full details about the mechanics of selling the plot or obtaining planning permission. 

Your web page headed "Land Valuation" states: "Potential Uplift in Land Value: Strategic land has long been a source for creating wealth.  Through UK Land Investments' knowledge and expertise you can benefit from the increasing value of strategic land in the UK.  (1)  Buy plots from UK Land Investments (2) 5 - 7 years potential re-zoning."  This web page includes a diagram showing the purchase price of a plot at £25,000 increasing to £68,000 with "3 - 7 years potential re-zoning".

So presumably the reason why most people buy agricultural plots from your company is because they hope to obtain planning permission.

However, it appears that they are not going to get any help at all with this from your company because the following notice is given at the foot of each page on your web site and also on your company's headed notepaper:

"UKLI Limited does not have any role in pursuing planning permission, or managing the land once it has been sold and as such, this is not to be viewed as a collective investment scheme."

So is this really a suitable purchase for the average person if they are going to have to organise their own planning permission?

Moreover, I note that in your letter you say, "We have dealt with a number of different solicitors and it is our experience that many do not understand this type of transaction".  You also state that, "With regard to the suggestion that an independent valuation be carried out, we believe this would be overly costly for a client due to its complicated nature". 

If many solicitors do not understand the transaction and a valuer would find it complicated to do a valuation, the same question arises again: is this really a suitable purchase for the average person?

Regarding your recommended solicitors, I note that you now give contact details of one firm on your website. 

For the avoidance of doubt, I wish to clearly state that there is no suggestion that any firm recommended by your company would give anything other than the highest level of independent advice.

It seems to me, though, that it is usually both normal procedure and common sense for anyone thinking of buying something not to use professional advisers who have had prior contact with the vendor, even if is only - as you state on your website - that "We have briefed them on exactly how we work and what we offer and thus they are suitably equipped to deal with client enquiries".

I would have thought that the fresh view of lawyers and valuers who have never previously dealt with agricultural plots would be particularly beneficial in the case of an investment whose value is not easily measured and the realisation of which is unlikely to be simple should the consumer wish to sell it or obtain planning permission.

Thank you for taking the time to deal with my enquiries, and I look forward to hearing further from  you.

Kind regards
Marian Owen

Reply from UKLI Limited
15 August 2007

Thank you for your letter dated 3 August 2007.

We respond as follows:

  1. UKLI Limited retains up to a third of the land on each site.  This gives UKLI an enduring stake in the site alongside its clients and promotes its retained land to be allocated for development.  This promotion is not for planning permission for the retained land which is a step further which UKLI is not involved with.  Once successfully allocated, land is typically worth 80% of the value it would achieve with outline planning permission.
  2. A property solicitor will of course understand the transaction but it will take time as they are unlikely to have dealt with a specific transaction such as this, which would add to the cost to the client.  With regard to valuations, these are generally costly and it is up to the client if they wish to incur this expense.  We would assist with this in any way we could.  Clients are encouraged to seek professional advice and are free to do so if they wish.  We do not believe there is any question that this type of purchase is suitable for the average person.
As mentioned previously, the most effective method for understanding the business model is to come to our office in London and discuss any questions that you might have with members of the team.  We would be delighted for you to take up this opportunity and we will make the necessary arrangements.

Kind regards
Yours sincerely
UKLI Limited


I thanked the company for this information and said that I would not be taking up their offer of a meeting for reasons already given.

At this point, I had already decided to give this company's offer a rating of Zero because of the unresolved concerns expressed in my letters to the company.

I then came across a further website - www.ukcapitalinvestments.com, which belongs to a company called UK Capital Investments Group, or UKCIG.  It does not appear to be a limited company, although the website gives the Executive Team as Bally Chohan (Chairman), Navaid Chaudhri (Global Sales Director), Rehan Khan (Chief Operating Officer) and Brian Allen (Global HR Director). 

The website is registered to UK Capital Investments Group at the Berkeley Square address, and the administrative and technical contacts are given as Bally Chohan, also at Berkeley Square.  However, the head office is given as being in Dubai, which is no doubt why the company can give investment advice (see the Private Equity page on the website) without being registered with the FSA.

And there's another website, too, at www.uklii.com.  This website is also owned by UK Land Investments Ltd, and once more the administrative and technical contacts are given as Bally Chohan, again all at the Berkeley Square address.

However, although the company's heraldic logo is shown on the site, nowhere does it refer to UK Land Investments Ltd: instead, all references are to UK Land Investments International.  It is a mystery as to what "UK Land Investments International" is, or where it is based.  It does not appear to be a limited company.

At the foot of the home page it says, "UK Land Investments International is solely for international clients based in the GCC, Middle East, Canada and Asia.  The products of UK Land Investments International are not to be marketed to persons in the UK or the USA and as such does not fall under the jurisdiction of the FSA, OSC or the SEC".

The website lists offices in U.A.E, Saudi Arabia, Hong Kong, India. Malaysia, Pakistan and Canada.

Business seems to be going well. 

There's a projected luxury hotel and apartment development in Dubai Marina called Berkeley House which is described as "sold" on the website at www.ukcapitalinvestments.com.  .

And  Arab News recently reported that "UK Land Investment International, a major British retail land investment company, has appointed Fathi Taleb Real Estate Est. as its local marketing agent in a contract that was signed in Jeddah last week".  In addition to selling UK land plots to Saudis, it appears that the company also hopes to sell Saudi property - whether to the Saudis or to the British is not stated - "with the expertise from the UK".

A piece in the Guardian dated 22nd September 2006 headed "Indians plough cash into false hopes of new homes on English green belt" indicates that purchases of land plots several thousand miles away and sight unseen may fail to meet expectations.  The article reported an Indian yarn trader who bought for £24,000 two plots in Kent in green belt which according to a Maidstone district council spokesman was "an area liable to flood, it was highly unlikely any residential development could take place".

UK Land Investments Ltd seems to have had a few problems of its own.  On 11 January 2007 its auditors Moore Stephens resigned and filed notice under s392 of the Companies Act.  Their letter says, "We are writing pursuant to section 394 companies Act 1985 to inform you of circumstances connected with our ceasing to hold office which we consider should be brought to the attention of the member and the creditors of the company". 

The letter goes on to record the following: "The duly appointed directors of the company appear to have no involvement in the running of the business.  Instead, the business is run by Robin Barton, Nigel Walter and Paul Charney, none of whom has been formally appointed as a director.  Neither the sole shareholder nor the de jure or de facto directors have been prepared to address corporate governance issues with us.

At 28 February 2006 the company had loaned £553,002 to Bally Chohan.  As he was then a director of the company, the loan was unlawful.  In addition, since he is the sole shareholder of the company the loan gives rise to a liability of the company to tax of £138,250 payable on 28 November 2006.  This tax has not been paid.  Mr. Chohan resigned as a director on 24 April 2006.  By 30 September 2006 the loan had risen to £957,732.  We are unable to say whether the loan is recoverable."

The letter goes on to refer to a loan of £2.5 million to a loss-making subsidiary company which in their view was "unlikely to be recoverable", and loans of £3.2 million to other companies or entities in the UK and overseas some of which were "entities whose ownership we were unable to discover or confirm" and "by 30 September 2006 this had increased to around £5.5 million.  We have not been provided with any evidence that the company has a commercial rationale for making these loans

As at 28 February 2006 £428,000 had been lent to a company owned by Robin Barton which appears to be insolvent.  By September 2006 this sum had increased to £923,277."

The auditor's letter goes on to record that, "We also noted that pursuant to legal obligations the company has made a provision for £500,000 plus VAT for costs relating to obtaining planning permission on each site from which plots have been sold. 

As at 28 February 2006 the total provision stood at £7.6 million but the company does not have the funds to incur this expenditure.  Furthermore, £3.245 million received from customers in respect of a site at Borehamwood is refundable plus 15% if the company does not obtain planning permission within five years and for which full provision has been made in the financial statements."

Finally, the auditors stated that they had been informed of various transactions and proposed transactions with "UKLI India, Saudi British Property Investments Limited and other entities whose ownership is unknown to us, Connaught Asset Management Limited, a company owned by Nigel Walter, and Bally Chohan whose commercial rationale is unclear and which do not appear to be in the interests of the company."

On Company House records, for various directorships other than UKLI, Bally Chohan's occupation is described as "Director", Nigel Walter's is "Business Professional" and Robin Barton's is "Solicitor".  For various Secretarial appointments, Paul Charney gives his occupation as "Lawyer" or "Solicitor".

It would seem that at least some of UKLI's problems were sorted, because the new auditors Hillier Hopkins LLP of Watford signed off the 2006 accounts with a statement headed "Emphasis of Matter - Going Concern" which record their unqualified opinion.  However, they refer to the company's loan facility of £4,991,000 at the balance sheet date, repayable on demand, having been extended to 28 February 2008 which was less than 12 months from the date of the approval of the financial statements and because of this and other matters referred to in the notes to the accounts they record "the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern".

Rating:

○○○○○○○○○○

BOW Notice: A zero score or a low score means that in our opinion the business model or the investment model has flaws and/or that we have found inadequate evidence to back up claims about earnings, sales, profits etc. It doesn't mean this evidence does not exist and it doesn't mean that the opportunity is a scam and it doesn't mean that the promoters are unprofessional or dishonest. Questions arising are normally contained within the body of the review, and readers who are interested should contact the company with these questions and/or questions of their own.
__________________________________

2. EDITORIAL POSTSCRIPT

The above correspondence with Robin Barton of UKLI was copied to Greg Mulholland M.P. at the time it was sent to Robin Barton in July/August 2007. It seemed that Greg Mulholland ought to be informed that the person he had met and corresponded with as Managing Director of UKLI - according to Nigel Walter's letter of 13 November 2006 to Greg, they discussed "the deliberate miss-selling (mis-spelling?) of some businesses in the so called land banking industry" - was not the managing director of the company and was not a statutory director of the company at all.

The other person present at these discussions according to Nigel Walter was "Brian". Presumably, that would be the Brian Smith BA (Hons) MRTPI, who according to the UKLI website "is a professional Town Planner with 25 years experience". According to the website of Regents Land at www.regentsland.com, he previously worked for several local authority planning departments and also worked for Laing Homes and Wimpey and he "was a member of the Department of Trade & Industry's Task Force on sustainable transport futures". Brian was head of UKLI's "Strategic Land Buying Team" which included Derek Lawrence BTP MRTPI MRICS and James Bromhead BSc (Hons) MRICS.

The only reply from Greg was a brief acknowledgment at the end of August saying that he would consider how he "could take this up". So, after further research, the above review was published a month later in October 2007.

3. EVENTS AFTER OCTOBER 2007

Subsequent events since preparation of the above Business Opportunity Watch Rating Review in October 2007 are as follows:

On 18th March 2008 Baljinder Chohan was disqualified as a director for four years following an investigation by Companies Investigation Branch of the Insolvency Service.

He was the founding director and controlling shareholder of UK Property Fund Managers Ltd, a company set up to raise up to £1 billion equity for a property fund. The proposal document which was sent to potential investors was specifically arranged to be compliant with Shariah law.

The Court found that the proposal document contained a number of lies and misleading statements, such as figures for the value of projects which had been falsely-inflated on Mr. Chohan's instructions; a false claim that there was an impending partnership between UKPFM and an NHS Trust; false names included in the list of executive team members; and lies in Mr. Chohan's own CV about holding an MBA from Henley Management College and having been a Communications Director at British Airways.

The court gave Baljinder Chohan leave to continue as a director of UK Land Investments Ltd (UKLI). He doesn't seem to have appreciated the offer, though, because he resigned as a director of UKLI on 12th May 2008.

No doubt his resignation was influenced by the fact that on 1st April 2008 the FSA presented a petition to freeze the assets of UKLI and to wind the company up on the basis that it was operating illegally. The petition was granted and UKLI is now in administration.

Interestingly, although Baljinder Chohan was registered as a director of UKLI at Companies House, the two men who according to the letter dated 11th January 2007 from auditors Moore Stephens really ran the company - Robin "please-come-to-our-office-to-discuss-what-we-do-because-it's-so-complicated-that-we-don't-explain-it-on-the-website" Barton and Nigel "I-call-myself-Managing-Director-but-I'm-not-really" Walter - are not registered with Companies House as directors of UKLI.

Both men are, however, registered with Companies House as directors of a number of other companies.

Nigel Walter

According to the information which Business Opportunity Watch obtained from Companies House, Nigel Walter's directorships include Connaught Asset Management Limited and Connaught Administration Services Limited, both in the business of "other financial intermediation" and Connaught Land Limited whose business is "development and sell real estate".

Connaught Asset Management offers investment in undeveloped land the way it should be done - as an investment fund "for the sophisticated investor market" through FSA-regulated Capita (Capita Financial Managers Limited). Investment can only be made through an independent financial advisor (IFA) and institutions.

Connaught's Diversified Strategic Land Managed Fund, Series 3 "will invest in a range of strategic land sites within the UK, with a very low to medium risk profile". Greenfield land is given under the heading of "Medium Risk" where it says there is "50% expectation of project". No doubt " the sophisticated investor market" has the experience and resources to form their own independent assessment as to whether the "50% expectation" is realistic.

There's also a limited liability partnership called Connaught Consultancy Services LLP which offers "specialist planning services for strategic land sites".

Nigel Walter was also the founding director of Regents Land Limited, and he remained its sole director until 27th February 2007, when he was replaced by Daniyal Abdulkader LLB LLM, "Dan Kader" (who apparently now poses as a property developer and resides, so we have been informed as at December 2010 , at a Chorleywood property which cost nearly £1.5 million in 2008).

According to the "Statement of Proposals Pursuant to Paragraph 49 of Schedule B1 of the Insolvency Act 1986" dated 9th June 2008 from the Administrators of UKLI, four of the sites where plots were sold by UKLI are in fact owned by Regents Land and were sold by UKLI under an agency agreement "the nature of which is currently being investigated by the Administrators".

This is very odd, because according to its website, Regents Land "specialise in providing strategic land investments to institutional and specialist investors" i.e. they say that they do not sell land directly to members of the public. So how come they did?

Regents Land says that it offers a four-phase promotion process : "Phase 1, Identification of suitable sites, Phase 2, Acquiring the site, Phase 3, Promotion to the local authority and Phase 4, Allocation and disposal". This would bring it straight into the same problem which the FSA says that UKLI had, i.e. of marketing an unauthorised collective investment scheme, which is a criminal offence.

Unlike the UKLI scheme - see analysis below - the Regents Land scheme does seem to be caught as a collective investment scheme because it offers a complete purchase-to-sale management package and therefore fulfils the essential requirement of a Collective Investment Scheme under section 235 of the Financial Services and Markets Act 2000, which is that the participants in the scheme do not have day-to-day control over the management of the property.

According to the FAQ on the website of www.uklandinvestments.com - now used by the Administrators to communicate information to plot holders - "Regents Land is technically still operational" but its website at www.regentsland.com has disappeared, it hasn't got any staff and it's not selling any further plots. Sadly, it's difficult for plot holders to contact anyone at the company because the only person left is the sole director Daniyal Abdulkader LLB LLM who, according to change of address details filed at Companies House, used to live in London but recently moved to Dubai Marina.

Bally Chohan is the sole shareholder in Regents Land. Regents Land was not subject to the FSA petition (which only applies to UKLI Limited) and is not in Administration.

Robin Barton

Robin Barton is a director of Chorus Direct Limited, a company which ran call centre activities for UKLI and which is wholly owned by UKLI Limited. Chorus Direct Ltd owes £2.3 million to UKLI.

Robin Barton is also a director of UK Healthcare Group Limited and its subsidiaries Belford Healthcare Limited, Seabrook House Limited and Forge House Services Limited. The business of all four companies is given on Company House records as "Other human health activities". Robin Barton has never, however, held any shares in these companies: they are wholly controlled by Bally Chohan, who owns the one and only issued share in UK Healthcare Group Limited, which in turn owns all the shares in its subsidiaries.

UK Healthcare Group owes £1.4 million to UKLI.

In addition to living in a make-believe world as regards his claims investigated by the court in connection with UK Property Fund Managers Ltd, Bally Chohan has held directorships in 17 dissolved companies, of which he set up and dissolved 10 within 2 years. He came and went and came back again as a director of UKLI Limited, which he wholly owns, being first appointed a director on 5th February 2003, resigning on 26th April 2006 and being re-appointed on 5th March 2007 before finally resigning again on 12th May 2008.

There's also a mysterious pattern of musical chairs (or "pass the donkey" perhaps?) with the directorships of St. James's Land Limited, again wholly owned by Bally Chohan. In less than 5 years, there has been a succession of 10 directors who have resigned. One of them was Bally Chohan himself, who was appointed on 3rd December 2003 and resigned on 19th November 2004. Another director, Sameera Shaikh, has come and gone twice. A further director, Lukhbir Bains, was appointed on 15th January 2007 and resigned on 27th February 2008, only to be re-appointed on 30th May 2008 as the sole current director.

Like Regents Land, St. James Land was not subject to the FSA petition and is not in Administration. The company is still operational, although most of the content has been removed from three of its websites (at www.stjamesland.co.uk and www.stjamesland.com - both owned by Bally Chohan - and www.stjamessland.com - owned by UKLI).

Previously, the St. James Land websites proudly claimed that the company was "founded in response to a number of unscrupulous companies who were buying and promoting worthless tracts of agricultural land with no real development potential, that broke all the planning rules". Well, fancy that!

However, Business Opportunity Watch found two more websites at www.sjl.co.za and www.stjamesland.co.za which still appear to be going strong marketing UK agricultural plots to residents of South Africa. The company is planning to exhibit at HomeMakers Expo in Durban at (Stand H18 to H21) from 2nd to 5th October 2008. The company previously offered land for sale at New Addington, Kent and is now offering land at Datchet, Royal Borough of Windsor and Maidenhead (next to a picture of Windsor Castle on the website). The guide price is £19,500 for a 250 square metre plot.

Investors handed over £69 million to UKLI for similar plots in the vain hope that they would obtain planning permission. They are likely to get back as little as 2.5p in the £.

With typical plot prices ranging from £12,000 to £18,500, that means that roughly 5,000 investors are likely to have lost nearly all their money.

It would be easy to put all the blame for this on the shoulders of Bally Chohan, Robin Barton and Nigel Walter. But they aren't the real culprits.

The real culprits are the Financial Services Authority.

The Financial Services Authority have a statutory duty under the Financial Services and Markets Act 2000 to protect consumers and in this case they failed miserably - for more than two years.

The FSA visited UKLI in late 2005 and early 2006 and concluded that its operations constituted an unauthorised Collective Investment Scheme, and that it was therefore trading illegally.

If a collective investment scheme falls within the definition in section 235 of the Financial Services and Markets Act 2000 then it falls to be regulated by the Financial Services Authority and there are restrictions on marketing such schemes to the public, even where the marketing is carried out by someone who is authorised by the FSA.

Marketing unauthorised collective investment schemes to the public is a criminal offence.

Surprisingly, instead of taking action for a criminal prosecution against the company or the directors or petitioning for the company to be wound up straight away, the FSA allowed the company time to come up with a proposed alteration to its business, which the company did quite quickly. Under this alteration (according to the Administrator's Paragraph 49 Statement) "UKLI retained a proportion of the land on each site and sought to procure re-zoning of only its retained land, rather than for the whole site. However, the assertion by the FSA was that in practice plots were still marketed to individuals under the same basis, in that the Company would continue to seek planning permission for the entire site, and considered that the Company was therefore still operating illegally as a CIS".

So what did the FSA do then? Nothing. For more than two years there is no evidence that they took any further action until April Fool's Day this year when they presented a winding-up petition to the High Court. The petition sought the winding-up on two grounds - that "the Company was unable to pay its debts and that it was 'just and equitable' that it should be wound up as a matter of public interest".

On 4th June 2008 the FSA published a Press Release containing the following quote from Jonathan Phelan, head of Retail Enforcement at the FSA:

"The FSA will not hesitate to pursue companies like UKLI, which offer unauthorised and illegal services that put such investments at unnecessary risk. We will continue to do everything possible to keep people safe from illegal schemes that deny them their right to complain and get compensation when things go wrong.

Our action against UKLI should serve as a warning to other companies that might be breaking the law in this way."

This Press Release contains misleading and false information - starting with the title "FSA seeks to close down UK's largest illegal 'landbanking' scheme" since the FSA omits to mention that the scheme only became so large because they had known about it for two years and done nothing.

The Press Release goes on to say, "UKLI's business was illegal because it operated as a CIS and should have been authorised by the FSA". This implies that it is a fact that UKLI operated as a CIS but it isn't a fact at all. It has not been subject to a court determination and it is merely the FSA's opinion ... and it's difficult to taken even this opinion seriously since the FSA didn't do anything about it for over two years.

Jonathan Phelan's quotes are ridiculous: he says that the FSA "will not hesitate" when they hesitated for more than two years. He also says that the FSA "will continue to do everything possible to keep people safe from illegal schemes" when they did nothing for two years in the case of UKLI. Other companies "breaking the law" will presumably receive the message that they have two years following an FSA visit to carry on with what they are doing.

Interestingly, a very different light is thrown onto the course of events by Bally Chohan's Statement of Affairs which he signed as a Statement of Truth on 4th August 2008 and which is lodged at Companies House, which reads as follows:

    1. "UKLI was advised by counsel in 2005 and 2006 that its trading and operation as a non FSA registered entity was lawful.
    2. In 2005 counsel advised that UKLI was not operating a collective investment scheme.
    3. In early 2006 leading counsel advised UKLI to change its business model and confirmed that the new model was not a collective investment scheme.
    4. In 2005/2006 the DTI undertook a detailed investigation of UKLI and were clearly satisfied as to the legality of its trading and operations.
    5. In early 2006 UKLI approached the FSA. The FSA took the view that the pre March 2006 plot purchasers were within non-regulated collective investment schemes and so should be transferred to a regulated entity. UKLI was advised that this did not mean offering plot purchasers a refund. In any event the FSA and UKLI entered into correspondence on this issue."

Both the written advice from counsel and the correspondence between the FSA and UKLI are company property and will now be in the hands of the administrators. In the interests of the creditors, shouldn't this evidence be made available to them?

In the absence of seeing any of this paperwork, let's see what the legislation says.

Thankfully, the legislation is short, self-contained and easy to follow. Here it is:

Financial Services and Markets Act 2000
Collective Investment Schemes
Interpretation
Section 235

(1) In this Part "collective investment scheme" means any arrangements with respect to property of any description, including money, the purpose or effect of which is to enable persons taking part in the arrangements (whether by becoming owners of the property or any part of it or otherwise) to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income.

(2) The arrangements must be such that the persons who are to participate ("participants") do not have day-to-day control over the management of the property, whether or not they have the right to be consulted or to give directions.

(3) The arrangements must also have either or both of the following characteristic -

(a) the contributions of the participants and the profits or income out of which payments are to be made to them are pooled;

(b) the property is managed as a whole by or on behalf of the operator of the scheme.

(4) If arrangements provide for such pooling as is mentioned in subsection (3)(a) in relation to separate parts of the property, the arrangements are not to be regarded as constituting a single collective investment scheme unless the participants are entitled to exchange rights in one part for rights in another.

(5) The Treasury may by order provide that arrangements do not amount to a collective investment scheme -

(a) in specified circumstances; or


(b) if the arrangements fall within a specified category of arrangement.

Although this legislation seems quite simple in principle, it's also a specialist area and there's little case law for guidance. The following analysis should therefore be taken only as setting out the basics.

You can see that the one key feature which a collective investment scheme must have in order to be caught by section 235 and require regulation by the FSA is that the people in the scheme must "not have day-to-day control over the management of the property".

With a piece of land which has been bought for the purpose of realising its potential for development, there's not really any "day-to-day control over the management" to do apart from trying to get planning permission on it.

But UKLI specifically said at the foot of each page on its website that it did not do this - it said that it only "offers parcels of land for sale to individuals.  UKLI Limited does not have any role in pursuing planning permission, or managing the land once it has been sold and as such, this is not to be viewed as a collective investment scheme". 

And it's highly unlikely that in practice UKLI did anything at all about pursuing planning permission, even for the land on each site which they retained for themselves, let alone for the land owned by the plot holders. There are two reasons for this:

Firstly because UKLI made big, quick, up-front profits from selling the plots, it would not make sense to divert their top planning personnel away from the very profitable core business of acquiring sites for division and resale as plots into the longer-term, much more difficult arena of trying to obtain planning permission. An acre equates to slightly more than 4000 square metres. The company sold plots of 400 square metres for £18,500. So that means that even if the company paid as much as £4,000 for an acre of agricultural land, that's only £1 per square metre, and they sold it pro-rata for 46 times as much profit. So even if the company retained as much as a third of a plot (note that the marketing material uses that famous marketing phrase "up to" a third) they would still walk away with 22 times as much profit (or, if you are into percentages, 2200% profit).

Secondly, it made no sense to try to get planning permission because most of their plots had faint hope of ever getting it.

Moreover, the participants in the UKLI scheme did have day-to-day control over the management of their property because each plot was registered in their own names and it was up to them to look after it or not as they wished, and to apply for planning permission for it or not, as they wished. Once the plots had been sold, UKLI had nothing more to do with them.

Of course, the reason why these people bought their plots in the first place was because UKLI said that they carefully selected their plots for their likelihood to get planning permission. And the public believed them because they had a Strategic Planning Team of people with the best qualifications who were members of honourable professional bodies such as the Royal Institute of Chartered Surveyors and the Royal Town Planning Institute; and because UKLI said, under the heading "What makes you so sure you will get planning" :

" ... it is in our interests not to invest in land that we do not believe has a very good chance of being re-zoned (or allocated) as we retain up to a third of a site for our own benefit. We also reserve £500,000 per site to promote our land with a Local Authority for potential re-zoning for residential development - no other company in this industry makes such a commitment".

Obviously, then, members of the public bought their plots in the belief that they would be easily able to get planning permission on their own land when UKLI obtained planning permission on the adjoining land which UKLI retained.

But this does not make it a Collective Investment Scheme because UKLI only promised to seek planning permission on their own land.

Even if the UKLI scheme were caught under this "day-to-day control over the management" requirement, it would also need to be caught by a second requirement before it could be classed as an unauthorised collective investment scheme.

This second requirement is - unsurprisingly for a collective investment scheme - that it must be "collective".

Under subsection (3) above, a scheme is regarded as collective if either:

(a) it's collectively owned i.e. the contributions of the participants and the profits or income arising are pooled (e.g. a scheme where each participant owns a share in the whole); and/or

(b) it's collectively managed i.e. all the parts of the property are managed by the operator of the scheme or his agents (e.g. a scheme where each participant retains title to his own discrete part of the whole property, and the whole property is managed by the scheme operator).

There was no pooling of the contributions or of the profits or income because each plot holder retained complete title over his own plot. So (a) above is out.

Also, (b) above is out because UKLI did not "manage the property ... as a whole" either on a site-by-site basis or on the basis of the sites collectively: on the contrary, after the plots had been sold, UKLI washed its hands of them.

Whoever came up with this scheme is very clever - albeit sadly lacking in morals if the person knew or suspected that it was going to be used to sell land at gross overvalue to unsophisticated investors.

The scheme appears to be bullet-proof from the collective investment scheme angle ... unless the FSA has got some damning evidence that they have been sitting on for some inexplicable reason such as surreptitious photographs of Robin Barton and Nigel Walter down on the plots with their daisy-dibbers and lawnmowers, for example.

The FSA itself appears to have given clearance to the UKLI scheme. In the Guidance to the Full FSA Handbook published on their website at http://fsahandbook.info/FSA/html/handbook/PERG/11/3, Question 21 and its answer read as follows:

Q21. I run a business which arranges for individual plots of land to be sold to potential investors and, whilst I refer to the possibility of obtaining planning permission as a way of increasing the value of the land, I don't, nor does anyone connected to me, have a role in pursuing any such permission nor any other control over the land as a whole. Do I need to be authorised?

No. If all of the participants have control over the obtaining of planning permission relevant to their individual plots of land the arrangements will not be a collective investment scheme. Arranging for investment in plots of land by itself is not a regulated activity as plots of land are not of themselves specified investments.

Overall, Business Opportunity Watch's conclusion is that, despite its bombastic comments, the FSA knew that its claim that UKLI was operating an unauthorised collective investment scheme was spurious. That would explain why this supposed defender of the public waited, cowering in the shadows, while UKLI sucked in money from more and more unsuspecting investors ... until the FSA got wind of the fact that a major credit about to petition the court for the company to be wound up for inability to pay its debts.

Then, the FSA suddenly changed from a shrinking coward into a galloping charger off on one of their favourite pursuits - a nice bit of spin. The petition was now risk-free because it could be on the grounds of the company's inability to pay its debts as well as on the grounds of public interest, and they banged in their petition shortly ahead of a major creditor.

The FSA's doubt that it has evidence that the company was operating a collective investment scheme is shown in the Administrator's letter to the creditors of 10 July 2008. This letter asks for plot owners to let the Administrator have any marketing material they have retained, such as DVDs, pamphlets or emails, presumably to see if there's anything to show that UKLI said that they would seek planning permission for the plots.

The fact that the FSA is asking for such evidence is curious, for several reasons.

Firstly, it's curious because the way in which a scheme is marketed does not seem to have any effect on whether or not it's a Collective Investment Scheme. The legislation says, "..."collective investment scheme" means any arrangements ... the purpose or effect of which is to enable persons taking part in the arrangements ... to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property ..." Claims or promises made in the marketing material for any scheme do not "enable persons taking part in the arrangements ... to participate in or receive profits ... etc". In the UKLI case, the only way in which people were enabled to take part in the arrangements and participate in the profits was by entering into a contract for the purchase of land.

Moreover, under section 2(5)(a) of the Law of Property (Miscellaneous Provisions) Act 1989), any contract over land other than short term leases has to be a written contract.

Furthermore, it can't be the case that UKLI made any mistake with their written documentation. Not only would they have employed the best legal minds to draft it, but also - if they had made mistakes in drafting their documentation - the FSA would have jumped on them long ago.

And, lastly, it's curious because if misleading marketing was the evidence that the FSA needed to wind the company up then why didn't it obtain this evidence itself in 2006 ... for example by the simple expedient of getting some of its members of staff to pose as potential purchasers? Why wait until now, when they have to ask for the help of the people who have lost substantial sums of money due to FSA incompetence and inertia?

Or why didn't they ask the Advertising Standards Authority to adjudicate on some of the company's advertisements? Was it because they didn't like the idea of another authority being able to act quickly when they didn't? Or was it because they felt they had dug themselves into a hole by trotting out the collective investment scheme argument for the other landbanking companies and they didn't think they could depart from it? Surely not.

Or why didn't they pass the matter to the Office of Fair Trading to threaten the company with prosecution under the Misleading Advertisements Act, and require UKLI to add caveats to its marketing material about the fact that no planning permission has ever been given for plots sold by any landbanking company and so purchasers should obtain their own independent valuation advice before proceeding? It seems to Business Opportunity Watch that it really would have been irrelevant whether or not a case under the Misleading Advertisements Act would be likely to succeed if it came to court. The mere threat of having such negative publicity would have had put a big spoke in the company's wheel - either it complied, or it went to court.

Alternatively, the Office of Fair Trading might have thought that it was better to pursue action under the The Stop Now Orders (E.C. Directive) Regulations 2001 which concern "injunctions for the protection of consumers' interests". Under these Regulations, according to the Explanatory Note, "where the relevant Court is satisfied that the trader has engaged in conduct which constitutes a Community infringement or is likely to do so" the court may make an order for the trader to stop the infringement or not to engage in the conduct which would constitute an infringement of any EC Consumer Protection Directives covered by this legislation. These Directives include "Council Directive 84/450/EEC of 10 September 1984 relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising".

Or, even more obviously, why didn't the FSA grasp the nettle that a loophole existed in these very specific circumstances, and simply ask the government to change the law, to say that any arrangement is always a collective investment scheme if it involves acquiring land and dividing it up into (say) more than 10 parcels and marketing it to the public on the basis of its potential increase in value? Surely just one clause added to section 235 of the Financial Services and Markets Act like this could have been done quickly, without needing the involvement of management consultants and a public consultation?

Speaking of management consultants, when schemes are allowed to continue and suck in millions there's a second disadvantage because when they do go belly-up the amount of work that's needed to sort things out is so enormous that it's only the biggest accountancy firms that can cope with it. This is unfortunate because normally the bulk of the work that's required when a company is in administration or liquidation is ... administration i.e. routine clerical work.

Whereas in central London £15,000 to £25,000 is the typical salary range for permanent administration jobs and £15 an hour is a typical hourly rate advertised on job sites such as www.reed.co.uk, www.jobserve.com and www.totaljobs.com, the big accountancy firms charge more than ten times as much as this. So in the case of UKLI the charge for "Assistants/Support staff" is £126 if regional staff are used and £198 if London staff are used.

With an insolvent company, these very high rates are effectively being paid by the creditors.

The economics of running a big accountancy practice must have changed a lot since the editor of Business Opportunity Watch was employed by a big four firm 15 years ago at a salary of £48,000 and an hourly charge out rate of £120. It seems that today staff on a salary of half that amount are being charged out at a higher rate. Overheads must have rocketed, obviously.

Looking again at the two-year period when no action was being taken to stop UKLI, coincidentally there was at the same time a big consultation involving considerable expense of public money under the auspices of HM Treasury. This was to deal with a couple of points of narrow concern (there were only 16 respondents to the Consultation) regarding Collective Investment Schemes at the instigation of some financial institutions. (Consultation on Amendments to the CIS Border for Property Transactions of 1 February 2007 and Further Consultation of August 2007.)

These institutions were worried that the exemption from being classed as a Collective Investment Scheme might not apply to certain of their activities involving the use of Special Purpose Vehicles and/or involving participants who engaged in such arrangements several times over. When they expressed their concerns, the government jumped in a big way, with not one but two consultations, involving a consideration of the possible solutions, two drafts of a Statutory Instrument (because they didn't get it quite right the first time) and two Partial Regulatory Impact Assessments. There was then a further amendment "to remove requirements that the arrangements should always have met the terms of the exemption in order to benefit from it which were deemed unduly burdensome" i.e. to effectively backdate the changes to make quite sure that those involved in any of these arrangements need not lose any sleep over it. The necessary amendment to the law was made and laid before Parliament on 24th June 2008 and came into force on 15th July 2008.

What a pity that not even a fraction of such effort was put into solving the UKLI problem.

What a pity also that the Treasury seems to have taken no action on a letter they received from John Howard, Chairman of the Financial Services Consumer Panel, on 29th March 2007. The Financial Services Consumer Panel works "to ensure that the FSA regulates the financial services industry in the UK in the interests of consumers". John Howard's letter was sent in response to this Consultation and he said that the Panel had no objections to the proposals in the Consultation "as they appear to relate to transactions at an industry level rather than impacting directly on consumers".

However, his letter went on to express concerns about "land banking schemes" and he stated that "the Panel believes that a great deal could be done to protect consumers if the relevant legislation and/or regulations were made flexible enough to deal with these schemes without hampering legitimate commercial or social enterprise. ... the Panel has been advised of roughly three dozen schemes that are being marketed or have recently been marketed, with a typical potential loss to consumers of about £1mn from each although some schemes exceed this. Consumers do not, of course, have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme when investing in an unauthorised scheme, so must bear losses personally".

John Howard's letter is published on the website of the FSA Consumer Panel at www.fs-cp.org.uk.

It seems to have fallen on deaf ears.

To add insult to injury, according to the minutes of the creditors meeting of 28th July, the FSA has now used the medium of the Administrator to ask the creditors to "fund a court determination of whether or not UKLI had been operating a collective investment scheme. Such a determination would enable land owners to return their land to UKLI and fall to be unsecured creditors of UKLI".

Since the company does not have the necessary funds, it looks as if there will never be a court determination ... unless the FSA does the decent thing and funds the determination themselves.

The Administrators' Notice of Meeting of 10th June 2008 says that their investigations are at an early stage but that the potential claims they "would give consideration to" include "breach of fiduciary duty" by current or former directors or shadow directors of the company.

What about investigating the breach of duty by the FSA?

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